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Colombia 2016 | EXECUTIVE GUIDE | REVIEW: DOING BUSINESS

A short yet vital overview of key information to consider before setting to work in Colombia.

Colombia enjoys an array of advantages that most countries could only hope for; it sits at the intersection of the Americas, it has access to the Atlantic and Pacific Ocean, and the country's diverse geography is rich with natural resources. Following a period of rapid growth and development during the last decade, Colombia has become the fourth-largest economy in the region, with annual GDP growth rates in recent years exceeding regional and global averages.

In the World Bank's Doing Business 2016, Colombia was ranked 54th in the world in terms of the ease of doing business in the country. Compared to the 29.4 days required on average to start a business in the Latin American & Caribbean region, the 11 days required in Colombia reflect concerted attempts to maintain investor-friendly policies on the part of the government. The same report rated the strength of minority investor protection in Colombia 7.2 out of 10, far outpacing the regional average (4.9) and the average among OECD high-income countries (6.4). The World Economic Forum's 2015-2016 Global Competitiveness Report echoed these findings, ranking Colombia 10th for its strength of investor protection and the best in the world for the efficacy of its legal rights pertaining to the financial market. The value of FDI in Colombia was $1.72 billion in 2004, while in 2014 that figure rose to $16.257.

Business Entities

Businesses wishing to establish an operation in Colombia may do so by incorporating as either a subsidiary or a branch. The most common types of incorporation for foreign businesses are stock corporations, simplified stock corporations, and limited liability companies.

Stock Corporation

Liability of shareholders in stock corporations is limited to the value of their capital contribution, though in special cases liability may extend to matters of labor. Capital stock is represented by ownership shares, at least 50% of which must be subscribed at the time of incorporation along with payment amounting to one third of the value of each share. Assignment of shares is done through endorsement and delivery of the security.

Simple Stock Corporation

Liability of shareholders in simple stock corporations is strictly set at no more than the value of their capital contributions. As with regular stock corporations, capital stock in simple stock corporations is represented by shares, which can be assigned through endorsement and delivery.

Limited Liability Company

A maximum of 25 partners of a limited liability company are liable for the value of their capital contributions and also take on fiscal and labor liability. Capital stock is represented by quotas, which must be fully paid at the time of incorporation and at any instances of a capital increase thereafter. The assignment of quotas after incorporation requires a revision to the company's bylaws.

Branch

Foreign companies also have the option of incorporating a local branch to carry out operations in Colombia. These branches are required to adhere to Colombian GAAP reporting requirements and must maintain financial records denominated in Colombian pesos prepared in Spanish.

Both branches and stock companies are required to appoint a statutory auditor. Incorporation of stock companies must be done through a corporative contract and may or may not require a public deed of incorporation. Registration of all documents must occur with the chamber of commerce in the city of incorporation and renewal of registration must take place every year.

Free Trade Zones

Colombia currently has the most free trade zones of any country in the region. Since new legislation concerning FTZs came into effect in 1991, 90 new zones have been approved, pushing the total number throughout the country to 101. Businesses operating in FTZs can take advantage of a flat income tax rate of 15%, custom duty exemptions, procedural facilitating of import and export activities, and many other incentives as set out by the current regulations of Law 1004 of 2005.